US stock market opened in red on Wednesday, October 7 after the S&P 500 hit a fresh all-time high in the previous session as oil prices and Treasury yields jumped.
Nasdaq Composite dropped 0.54% to 27,451.32, S&P 500 declined 0.40% to 7,787.71, while Dow Jones Industrial Average traded 0.67% or 347 points lower at 51,173.8 at 7 pm IST.
The decline in US stocks come after Treasury yields rose, with the 30-year Treasury bond rising 5 basis points to 5.70%, highest since 2002 while the benchmark 10-year Treasury was up 6 basis points to 5.32%. this comes as bond sell-off continues over the past six weeks amid concerns of investors over inflation and elevated energy prices. Overseas too, bond sell-off continued, with the yield on the 10-year French bond climbed 12 basis points to trade at 4.87% and 10-year UK Gilt yield climbed 7 basis points to 5.44%.
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Bond yields jumped after International Monetary Fund Managing Director Kristalina Georgieva called advanced economies the “worst offenders," as rising yields have left governments that have amassed too much debt under mounting budget pressure.
Meanwhile, Brent crude oil prices soared above the $100-a-barrel mark on Wednesday, continuing gains from the previous session as persistent risks to Middle East energy flows outweighed signs of improving supply from the region. The renewed attacks by Iran on vessels in the Strait of Hormuz dampened optimism at a time when shipments through the waterway were approaching prewar levels, lifting Brent toward $102 a barrel.
Investors are also focusing on minutes from the Federal Reserve's September meeting for indications on whether rate hikes will continue after September rate hike. Markets are especially looking at the possibility for a rate hike in December. At present, market is estimating a 78% chance that the Fed will keep rates unchanged at its next meeting, according to the CME Group's FedWatch tool.
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